Quintain is to create London’s next “great estate” by building the entirety of Wembley Park for the rental market.
The developer, which was taken over by US private equity giant Lone Star in 2015, plans to hold and rent 5,000 homes at the development, which will have an income of £150m each year.
In an unheard of expansion in construction speeds, it will be finished by 2024, with work to begin on 3,000 homes by the end of 2017.
“The reason people don’t build in scale at the rate that we’re doing is because they cannot afford it. But we can,” says Quintain’s chief executive, Angus Dodd.
It’s a massive change in direction and tempo for the site, which Quintain bought in 2002. 7,000 homes will be built overall, around 1,000 of which have already been built and mostly sold into the private market. A further 1,000 will go into affordable tenures.
Click here to view a fly-through of the Wembley Park development
Since Lone Star’s takeover, Quintain has decided to build out the entirety of the remaining units for rent. It received planning for the masterplan in June 2016, and a five-year, £800m development agreement was agreed with AIG, Wells Fargo and Canada Pension Plan Investment Board in November 2016.
Dodd says the switch to rental was logical.
“The comparison between trying to buy and renting is very powerful now,” he says. “If you were to buy one of our flats, they would probably cost £350,000 to £400,000, so you would need the best part of £50,000 to £60,000 as a deposit.
“Economically, from the consumer’s perspective, this is the future for mid-market London housing. People just won’t buy anymore, I’m convinced,” he says.
Chief executive officer James Saunders says: “Not to have to be exposed to the vagaries of the for-sale marketplace is hugely attractive.
“To us, having lived through 2008, 2009 and 2010, purchasers putting deposits down and defaulting, becoming a landlord by default – we are now becoming a landlord by design, and that is so much more compelling for us.”
Building to rent will help construction speeds, as there will be less need for phasing to maintain sales prices. Even so, starting 3,000 homes in 11 months does beggar belief. Dodd does not think so.
“If you’re selling, that’s correct. If you’re renting, it’s a completely different absorption rate to the rate you could sell at,” he says.
Dodd points out that local and national policy is focused on accelerating the delivery of homes.
“It’s not irrational to do what we are doing,” he says. “We have the cash to do it, and we are absolutely convinced that what we are doing across the whole estate will create something at Wembley Park that is extremely attractive as a place to live, for a wide variety of people.
“So I don’t feel that we are taking this huge plunge into the unknown. All the macro and London level drivers are pointing in our direction.”
The end result of this will be 85 acres in north London under single ownership, with 5,000 homes producing £150m each year in rent, alongside over a million square foot of offices and over 70 shops.
And we will know if that bid has paid off within a decade. Lone Star, true to its private equity heritage, is unlikely to hold it.
“Will Lone Star own Quintain in 10 years’ time? No, it won’t,” says Dodd, though he added he did not know what shape such a deal would take.
“It is just too early to know how that transaction might be structured, and what they might look like. We have got 3,000 units to deliver before we think about that.”
The scheme bears obvious comparisons to East Village in Stratford, where the 1,500-home Olympic Village was turned over to Delancey and Qatari Diar.
Dodd says Wembley will differ through design, and the fact Quintain will still phase the delivery of the homes. All 3,000 of the first wave will not have to let at once.
According to Saunders, the key will be a differentiation in products and services, appealing to different markets within the PRS itself.
“We think we can create a great range there, with multiple selling points,” he says.
He also points out that Wembley has a huge amount of office, retail and leisure now as part of the offering – until 2013, it was an events-only destination.
Nor does London’s well-documented construction crisis and accompanying skills shortage dismay Dodd.
“We are a good client for a contractor. We are extremely well-capitalised; we are committed to build out what we started to build; there is a long pipeline of work. The truth is we have not had a problem securing contractors to come and talk to us. Not at all.”
Despite the scale of the development, Dodd also did not rule out investing elsewhere.
“We have our hands full at the moment here,” he says.
“But we are looking, we have looked at other sites. Particularly in London within the M25. It’s very difficult to find something of the scale that we have at Wembley. We will be choosy, but if we find the right thing, we will do it.”
WATCH: A fly-through of Quintain’s plans for Wembley
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